By Bhavik Patel
Gold has touched $2000 on fear of further banking turmoil and the Fed’s message about a potential pause in tightening. Gold is attracting new buyers as many traders remain nervous post-Fed and over how quickly will U.S. authorities be able to contain further banking turmoil. The ETF buyer is also supporting gold, with the Bloomberg data showing that gold-backed ETFs added more than 300,000 ounces in the last trading session, marking the biggest daily gain since last June. Retracting the US dollar is also working in favour of gold as now Fed is not going to raise rates from here on.
Gold is overbought in MCX as momentum oscillator RSI_14 is trading at 69. Clearly, the strong run-up we saw makes us cautious to initiate a fresh buy at the current position. Instead of chasing the price, we would recommend to wait for a dip as risk/reward is not favourable to take a long position from here. Prices currently are trading above 78.6% retracement taken from the lows of 54771 and highs of 60455. Price is also trading far from its 20-day moving average which again indicates that it is overstretched and some mean reversion is likely to take place. So we would again recommend not to take a fresh position from here but wait till correction around 58500 for the expected target of 59600 and stop loss of 58000.
(Bhavik Patel is a commodity and currency analyst at Tradebull Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)